FXStreet (Mumbai) – Bloomberg reported that officials familiar with the numbers believes the European Central Bank has left forecasts largely unchanged from those published in September. Citing documents circulated by the ECB before today’s Governing Council meeting the official said that changes to the projections are minimal.
One of the officials said that the central bank will in today’s meeting revise down its 2017 inflation forecast to 1.6 per cent from 1.7 per cent. Executive Board member Peter Praet in November flagged the ECB’s concern that the date when the bloc reaches inflation goal of just under 2 per cent “will slip”.
If the ECB’s existing outlook for a continued, though weak, recovery is confirmed, it would result in weakening of case for policy makers who feel more stimulus is required to combat low inflation. These policy makers will then have to explain yet to surface risks to explain their shift in policy.
ECB President Mario Draghi had hinted at easing. The easing tools might include a cut in the deposit rate from minus 0.2 per cent, and an expansion or extension of a 1.1 trillion-euro ($1.2 trillion) asset-purchase program.
In September, the ECB predicted an increase in growth from 1.4 per cent this year to 1.7 per cent in 2016 and 1.8 per cent in 2017. It said it saw the inflation rate rising from 0.1 per cent in 2015 to 1.1 per cent next year. ECB Vice President Vitor Constancio on 25th November said that the final decision on stimulus will depend on the revised forecast. Draghi told European lawmakers on 12th November that the projections would be one input into the monetary-policy meeting. The work of ECB committees on potential measures will also be discussed upon.
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